By Keat Foong, Executive EditorTucson, Ariz.—Unlike construction financing, refinancing is still relatively plentiful for multifamily housing in today’s markets. But only if certain criteria are met. Here is an example of one transaction, completed by Alliant Capital LLC, that works. Alliant Capital supplied $5.5 million for the refinance of Cottonwood Creek, a 102-unit townhouse community in Tucson, Ariz. The 10-year Fannie Mae loan carries a 5.71 percent rate, and a two-year interest-only feature. The original loan on Cottonwood Creek was first taken out about 10 years ago—before many of the high-leverage loans were made in the bull-run of the past few years. Indeed, the borrower will get cash out on this deal, says Jay Blasberg, senior vice president at Alliant Capital. According to Blasberg, refinancing requirements today include at least 86 percent minimum occupancy for 90 days, and a well-maintained property. This asset was a Class C to Class B+ property that was “particularly” well managed and had a strong sponsorship, he says. “We are looking for experienced management that is strong financially,” he says. The borrower was the Tucson, Ariz.-based HSL Properties, Alliant Capital’s biggest client, says Blasberg. The loan was originated under Fannie Mae’s Choice Refinance program, which delivers streamlined underwriting and lower rates and fees for loans in the lender’s servicing portfolio, said Blasberg. “Utilizing our partnership with Fannie Mae’s Choice Refinance program has always been popular with our borrowers,” he says. Also, it helped that the property was located one mile from the University of Arizona. The community had a mixed occupancy, with 29 percent of the units rented by college students. As such, Alliant Capital says it was considered a stable asset. And Alliant Capital was able to complete the refinance using student housing underwriting guidelines, which apply to properties with more than 20 percent student occupancy.Although the community is not considered “dedicated student housing” with 90 percent or more units rented to students, parental guarantees are required, further increasing the property’s financial security, adds Alliant Capital.The maximum LTV for a cash out or non-cash out refi loan is 75 percent; but it is 80 percent on a purchase, explains Blasberg, who has been making real estate loans for 30 years. Blasberg describes the deal as a “bread and butter” transaction.
INSIDE THE DEAL: Alliant Capital Provides Borrower with Cash-Out, Interest-Only Refinance
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